Written by: Peter Hern, Licensed Building Inspector, Member of Registered Builder Unlimited, registered No. DB-U 12617
Buying a property in Melbourne can be exhilarating, but when your building inspection report arrives with bad news, it can feel like a setback. A failed inspection doesn’t necessarily mean giving up your dream home, it simply means you need to proceed carefully, armed with the right information and advice.
Whether you’re a first-time homebuyer or an experienced investor, understanding what a failed building inspection really means can help you avoid costly mistakes and make informed decisions.
What a Failed Building Inspection Really Means
A building inspection identifies structural, safety, and maintenance issues within a property.
If major problems are uncovered such as foundation movement, roof deterioration, or water damage, the property may be classified as having “failed” inspection standards.
However, a failed report isn’t necessarily a dealbreaker. It’s a red flag that gives you an opportunity to:
- Negotiate repairs or price adjustments
- Reassess your investment
- Consult your conveyancer or legal advisor before proceeding
In Victoria, most contracts include a building inspection clause, protecting buyers by allowing withdrawal or renegotiation if significant defects are found.
Pro Tip: Review your contract carefully before signing. Conditions vary, and your rights depend on how “major defects” are defined within your agreement.
Read more What Does a Building Inspection Cover for a detailed breakdown.
Setting Realistic Expectations
No home is perfect, even new-built houses have minor flaws. The key is to distinguish between cosmetic and structural issues:
| Type of Issue | Examples | Action |
| Minor Defects | Peeling paint, worn flooring, loose fixtures | Cosmetic usually not dealbreakers |
| Major Defects | Foundation shifts, water penetration, termite infestation | May require professional remediation or negotiation |
During our recent inspection in Berwick, we found that the walls have cracks and show signs of moisture intrusion. The roof is leaking and the gutters are sagging. We also noted outdated wiring, poor ventilation, and defective windows and doors.
In another case in Brunswick, termite damage and hollow timber were found in the foundation and subfloor areas. Our detailed report enabled the buyer to negotiate a $25,000 price reduction. This is a perfect example of how a thorough inspection can protect your investment.
A balanced report that identifies small problems isn’t a “failed” inspection, it’s a realistic assessment of the property’s condition.
Common Red Flags in Failed Building Inspection
Melbourne’s housing stock includes many older homes, and local conditions (such as soil movement and moisture) make certain defects more likely. Watch out for these major warning signs:
1. Water Penetration in Masonry
The moisture in brickwork weakens structure, promotes mould, and attracts pests. The Victorian Building Authority (VBA) notes that poor drainage and ageing roofing are common culprits in water ingress and mould development.
Inspectors should check for dampness, stains, or rising moisture, these are signs that are often missed in poor inspections.
Read more here about the Victorian Building Authority, Damp and Mould Guide
2. Structural Movement
Many Melbourne suburbs, such as Berwick, Werribee, and Craigieburn, sit on reactive clay soils that expand and contract with moisture changes.
According to the VBA, this can cause foundation movement, wall cracking, and uneven floors, some of the most costly issues to repair.
Missed signs of structural movement can turn a good deal into a financial burden.
See here for VBA – Foundation Movement
3. Deterioration of Building Elements
Timber stumps, plaster, and subfloors in older homes particularly Edwardian and mid-century properties are prone to age-related deterioration.
Comprehensive inspections must evaluate joints, floors, and under-structure conditions.
4. Roof Damage
Damaged tiles, leaking gutters, or sagging frames can lead to expensive repairs.
Given Melbourne’s unpredictable weather, roof integrity should always be assessed for structure, drainage, and water-tightness.
Understanding Your Contract Terms
Typical Victorian property contracts may allow you to:
- Withdraw from the sale if significant defects are discovered
- Request repairs before settlement
- Renegotiate the purchase price
- Extend the settlement period to allow repairs
Always confirm these rights in writing and seek advice from a qualified conveyancer or property lawyer.
What To Do After a Failed Building Inspection
If your inspection reveals serious defects, follow these steps:
- Review the Report Carefully
- Highlight the major issues and consult your inspector for clarification.
- Get a Second Opinion
- Engage another licensed inspector or trades specialist for an independent assessment.
- Negotiate with the Vendor
- Use the report to request repairs or renegotiate the purchase price.
- Seek Legal Advice Before Withdrawing
- Ensure your contract allows for termination without penalty.
- Leverage the Findings
- Even a failed report can be a negotiation tool, or a chance to walk away wisely.
When Inspectors Miss Major Issues
If you discover significant defects after purchase, and they should have been identified in your report, you may have grounds for complaint or compensation.
In such cases:
- Obtain a second expert report
- Gather evidence (photos, emails, contracts)
- Consult a property lawyer about your options
Work only with qualified, experienced inspectors who understand Melbourne’s soil conditions, building types, and Victorian Building Regulations 2018.
Why Older Melbourne Homes Need Extra Care
Melbourne’s Edwardian, Victorian, and mid-century homes have undeniable charm, but they come with age-related challenges. Timber, plaster, and brick materials degrade over decades.
According to Heritage Victoria, many older Melbourne homes use materials like timber stumps, lath-and-plaster walls, and single-brick masonry that require regular maintenance.
A thorough inspection identifies these vulnerabilities so that buyers can preserve character while planning maintenance.
The Importance of Choosing the Right Inspector
Choose an inspector who is:
- Licensed and insured
- Experienced with Melbourne’s property types
- Transparent in their reporting and communication
- Able to provide sample reports and references
A trustworthy inspector doesn’t just find problems, they educate buyers, offering insight into repair costs and future maintenance.
All professional inspections should comply with Australian Standard AS 4349.1 for pre-purchase inspections.
Check this out Do You Get a Building Inspection Before Making an Offer for a helpful guide.
Legal and Financial Considerations
If your inspection results lead to contract cancellation:
- Keep copies of all reports, communications, and legal correspondence
- Confirm deposit refund conditions in writing
- Consult your conveyancer or solicitor to ensure compliance with Victorian consumer laws
Final Thoughts
A failed building inspection isn’t the end of your property journey, it’s a valuable checkpoint.
By acting quickly, consulting experts, and understanding your rights, you can protect your investment and make smarter property decisions.
If you’re looking for independent, comprehensive building and pest inspections in Melbourne, contact BuyWise Inspections, a trusted local provider known for integrity and expertise.
FAQ
If your property fails a building inspection, you may be entitled to withdraw, renegotiate, or request repairs under your contract terms.
Yes. Many buyers proceed after renegotiating the price or having issues repaired before settlement.
If your inspector was negligent, you might have grounds for compensation. Always engage qualified professionals.
Typically between $400 and $800, depending on property size, type, and location.
Yes. Pest inspections identify termite and timber damage that might not be visible during a standard building inspection.
About the Author
Peter Hern is a Licensed Building Inspector and Registered Builder (DB-U 12617) with over 20 years of experience inspecting residential and commercial properties across Melbourne and greater Victoria.
As a member of BuyWise Inspections, Peter specializes in identifying structural defects, moisture intrusion, and compliance issues, helping clients make informed property decisions. His reports adhere to Australian Standard AS 4349.1 and reflect his commitment to accuracy, transparency, and client education.
Learn more about our team’s qualifications and inspection process on our Why Us page.
Disclaimer
The information provided in this article is for general guidance only and should not be considered legal, financial, or professional advice.
Property conditions vary by location and circumstance; always consult a licensed building inspector, conveyancer, or legal professional before making purchase decisions.
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